AIM Rule 26

Corporate Governance

Chairman’s Introduction

Our core values of investing in our people, systems and capacity remain as important to us today as they have been over the last 23 years. A culture of strong corporate governance is an essential element of that. 

It is the Board’s role to ensure that the Group is managed for the long-term benefit of all of its stakeholders. We believe in effective and efficient decision-making in a manner that incorporates the needs of our many stakeholders. Corporate governance is one of the important parts of the Group’s strategy and our aim of continual improvement of our processes and risk management whilst supporting the continued growth of the business is vital in the ever-evolving corporate governance regime we adhere to.

Changes to the corporate governance regime

As an AIM-listed company, the Company is required to provide details of a recognised corporate governance code that the Board of Directors has decided to apply and explain how the Company complies with that code, and where it departs from its chosen corporate governance code provide an explanation of the reasons for doing so.

In considering its own arrangements for governance, the Company adopted the provisions of the Quoted Companies Alliance’s Corporate Governance Code (“the QCA Code”), published in April 2018. The key elements of the Company’s corporate governance arrangements are described below.

I am delighted to confirm that we comply with all the principles of the QCA Code, as well as elements of the UK Corporate Governance Code, published in July 2018. We will continue to adopt further elements of the UK Corporate Governance Code as appropriate.

A key element of the Company’s Corporate Governance strategy was the creation of the Audit and Remuneration Committees which each fulfil an important role as an independent check and balance to the executive decision-making process. Each of these Committees are composed of, and chaired by, the independent non-executive Directors of the Company. The Board conducts an annual review of the Company’s Corporate Governance Code to ensure it is reflective of, amongst other things: any recent legislative changes; the recommendations of the Quoted Companies Alliance and its Corporate Governance Code; the UK Corporate Governance Code; and the economic and social environment within which the Company operates.

We are confident that our proven approach to corporate governance will help to shape a robust and strong organisation as we deliver our strategic plan and take the business to the next phase of growth.

Full details of our Corporate Governance Code can be found using this link.  

Willie MacDiarmid, Chairman

04 April 2019

SMS plc’s issued share capital is 112,495,800 ordinary shares of 1p each.

There are no restrictions on the transfer of the Company’s shares.

Shareholder	Percentage Shareholding
Merian Global Investors (UK) Ltd	17.07%
Liontrust Asset Management	12.47%
Fidelity Investments	5.54%
Soros Fund Management LLC	4.75%
River & Mercantile Asset Management	4.40%
Steve Timoney	4.07%
Alan Foy	3.97%
Hargreave Hale Ltd	3.82%
Canaccord Genuity Wealth Management (CI)	2.54%
Brooks Macdonald Asset Management	2.25%
Legal & General Investment Management	2.07%
Westray Capital Management LLC	1.86%

In so far as the company is aware as at 6 August 2019 (In accordance with AIM Rule 26), the percentage of the Company's issued share capital that is not in public hands is 34.34%.

There are no other exchanges or trading platforms on which SMS Plc securities are trading.

SMS Plc is subject to the UK City Code on Takeovers and Mergers.

Nominated Advisor and Joint Broker - Scotland
Cenkos Securities Plc
66 Hanover Street
Edinburgh
EH2 1EL

Nominated Advisor and Joint Broker - England 
Cenkos Securities Plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS

Joint Broker
Investec Bank plc
30 Gresham Street
London
EC2V 7QP

Auditors
Ernst & Young LLP
G1 Building
5 George Square
Glasgow
G2 1DY

Company Solicitor
CMS Cameron McKenna Nabarro Olswang LLP
1 West Regent Street
Glasgow
G2 1AP

Financial PR and Investor Relations
Instinctiff Partners
65 Gresham Street
London
EC2V 7NQ

Registrars
Computershare Investor Services Plc
The Pavilions
Bridgewater Road
Bristol
BS99 6ZZ

During the year the Audit Committee comprised Graeme Bissett (Chair), Miriam Greenwood and Willie MacDiarmid. All three members of the Audit Committee and considered to be independent non-executive directors. Graeme Bisset is an experienced corporate financier and qualified chartered accountant and Miriam Greenwood has qualifications as a barrister and in corporate finance. The Chief Financial Officer and Head of Internal Audit also attended the meetings by invitation.

The Audit Committee’s role is to assist the Board with the discharge of its responsibilities in relation to financial reporting including reviewing the Group’s Annual Report and Accounts and half-year financial statements, reviewing and monitoring the scope of the annual audit and the extent of non-audit work undertaken by external auditors, advising on the appointment of external auditors and reviewing the effectiveness of the internal audit function, internal controls, whistleblowing and fraud systems in place within the Group.

The Audit Committee meets at least three times in each financial year and has unrestricted access to the Group’s external auditor.

The Company has an internal audit function consisting of full-time dedicated members of staff. The Audit Committee will review the effectiveness of the internal audit function and its terms of reference on an annual basis and recommend to the Board any changes required as a result of the review. Reports from internal audit are considered at each meeting and, as part of its deliberations, the Committee will actively engage in selecting areas to be audited.

The main roles and responsibilities of the Audit Committee are set in its Terms of Reference.

Click here to download the Audit Committee Terms of Reference. 

The Nomination Committee is chaired by Willie MacDiarmid and also comprises Miriam Greenwood, Graeme Bissett and Alan Foy. Willie MacDiarmid, Miriam Greenwood and Graeme Bissett are considered to be independent Non-executive Directors.

The Nomination Committee considers the selection and re-appointment of Directors. It identifies and nominates candidates to fill Board vacancies and regularly reviews the structure, size and composition (including the skills, knowledge and experience) of the Board and makes recommendations to the Board with regard to any changes.

At present all Directors are appointed for a period of three years. As the Company continues to grow significantly in a very active market the retention of high-performing Directors to lead the Company is seen as essential in delivering shareholder value and developing the maturity and governance of the Company through a period of significant growth.

No particular targets have been set for developing a diverse pipeline of Directors, but the Nomination Committee fully recognises the benefits of greater diversity and will continue to take account of this when considering any particular appointment. It will continue to ensure that the best people are appointed for the relevant roles.

Click here to download the Nomination Committee Terms of Reference.

The Remuneration Committee is responsible for reviewing and making recommendations to the Board on the total remuneration for the Executive Directors and senior management. The Remuneration Committee oversees the Group’s remuneration policy, strategy and implementation to ensure that the policy delivers on the key objectives of growing earnings and delivering strong returns, in alignment with external shareholders.

The Remuneration Committee comprises Miriam Greenwood (Chair), Willie MacDiarmid and Graeme Bissett. The Remuneration Committee meets a minimum of twice a year.

The Remuneration Committee reviews the performance of the Executive Directors and makes recommendations to the Board on matters relating to their remuneration and terms of service.

The Remuneration Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any employee share option scheme or equity incentive plans in operation from time to time.

The Committee’s remit is as follows:

• Determine and agree with the Board the policy for total remuneration of the Executive Directors, and then monitor the ongoing effectiveness of that policy;
• agree KPIs for the Executive Directors and senior management team;
• determine the level of any payment made to the Executive Directors or members of the senior management team by way of compensation for, or otherwise in connection with, loss of office or employment;
• approve the design of, and determine targets for, performance related pay schemes operated by SMS and approve the total annual payments made under such schemes;
• review the design of all share incentive plans for approval by the Board and shareholders. For any plan, to determine each year, the overall number of awards and the individual awards to Executive Directors and senior management team;
• review Group-wide salary increases; and
• review any major changes in employee benefits structures throughout the Group.

The levels of remuneration for the Chairman and all of the non-executive Directors reflect the time commitment and responsibilities for the roles held. The remuneration is salary only with no share options or other performance-related elements.

Where a remuneration consultant is appointed by the Remuneration Committee the remuneration consultant will be identified in the annual report. All future annual reports will clearly report whether the remuneration consultant has any connection with the company of individual directors.

The remuneration schemes have been designed to promote long-term shareholdings by the executive directors that are aligned with the interests of long-term shareholders.  All of the current share award schemes currently in place have a vesting period of 5 years.

The Remuneration Committee confirm that only the basic salary is pensionable, and the contribution rate available to executive directors is aligned to that of the workforce.

All of the Directors are subject to election by shareholders at the first AGM after their appointment to the Board and to re-election by shareholders at least once every three years. In addition, any non-executive Director who has served on the board for more than nine years will be subject to annual re-election. 

It is the Company’s policy to provide for twelve months’ notice for termination of employment for Executive Directors, to be given by either party. For Executive Directors who have been newly recruited from outside the Group, the period would normally be six months, increasing to twelve months after twelve months’ service.

Click here to download Remuneration Committee Terms of Reference.

The Information Technology Committee is chaired by Ruth Leak, an information technology specialist, who was appointed on 29 May 2019. The Committee comprises Graeme Bissett, Miriam Greenwood and Willie MacDiarmid. Alan Foy, David Thompson and Tim Mortlock attend by invitation.

The Information Technology Committee is responsible for the review and approval of the SMS information technology strategy. It reviews and monitors the ongoing allocation of resources and funding required to deliver the implementation of this strategy and oversees the development and implementation of those information technology projects deemed to be of significant importance to the Group. The Committee ensures appropriate information technology standards and procedures are in place, including those related to the General Data Protection Regulation (GDPR) and, in close liaison with the Audit Committee, it ensures that information and technology risks are identified, assessed and managed with actions implemented as appropriate.